Tánaiste and Minister Troy confirm reduction of the Insurance Compensation Fund Levy
- Foilsithe: 30 Nollaig 2025
- An t-eolas is déanaí: 30 Nollaig 2025
Tánaiste and Minister for Finance Simon Harris TD, and Minister of State for Financial Services, Credit Unions and Insurance Robert Troy TD, have today (Tuesday, December 30th) confirmed the reduction of the Insurance Compensation Fund (ICF) levy from 2 per cent to 1 per cent.
The decision was announced by the Central Bank of Ireland (CBI) on 3 October 2025 and will come into effect on 1 January 2026.
Confirming the measure today, Tánaiste and Minister for Finance Simon Harris said:
“The Insurance Compensation Fund is an important protection mechanism for Irish policyholders. It ensures that in the event of an insurer going into liquidation, outstanding claims can still be funded. Since 2011, the Exchequer has advanced approximately €1 billion to the Insurance Compensation Fund.
However, I am pleased that the balance of the advances from the Exchequer has reached a level where the levy can now be reduced from 2% to 1%.
This reduction will benefit approximately 2.3 million private motor insurance policies and 1.3 million home insurance policies on renewal in January 2026.
The reduction in the annual percentage rate will reduce the level of motor insurance contributions by approximately €57 million next year. This will have a direct and positive impact on the cost of insurance and the onus is now on insurers to pass on this reduction to consumers.”
Minister of State for Financial Services, Credit Unions and Insurance Robert Troy commented:
“I am pleased that, from 1 January 2026, the levy will be reduced to 1%. This reduction will lead to savings of approximately €57 million for policy holders on renewal. I would like to reiterate the Government’s expectation that the insurance industry will offer value for money to consumers and that the reduction should be fully reflected in the cost of insurance policies from 1 January 2026.”
Notes
The Insurance Compensation Fund (ICF) was established under the Insurance Act 1964, which has been subsequently amended, by the Insurance (Amendment) Act 2011 and the Insurance (Amendment) Act 2018. The Fund is primarily designed to facilitate payments to policyholders and third-party claimants in relation to risks in the State where an Irish authorised non-life insurer or a non-life insurer authorised in another Member State goes into liquidation.
The ICF is financed through contributions received from non-life insurance companies up to a maximum of 2% of the aggregate of the gross premiums paid to that insurer or insurer authorised in another Member State in respect of policies issued in respect of risks in the State. In this regard, it should be noted that excluded risks are not levied. The contributions are collected by the Revenue Commissioners and are forwarded to the Fund through the Central Bank of Ireland, which is the Administrator of the ICF.
The Central Bank of Ireland has responsibility under Section 6 of the Insurance Act 1964 to carry out an annual assessment of the needs of the ICF and, where it is of the opinion that the state of the ICF is such that financial support should be provided for it, it is allowed determine an appropriate contribution to be paid to the ICF by each insurer or insurer authorised in another Member State in relation to insured risks in the State. However, because it is not pre-funded, there is a provision in Section 5 of the Insurance Act 1964, which allows the Minister for Finance to advance the necessary monies in the form of a repayable loan where there are insufficient funds available to enable payments from the Fund to be made in a timely manner. Advances are made on such terms as to repayment, interest, and other matters as may be determined by the Minister for Finance after consulting the Central Bank of Ireland. Over the last 14 years, the levy has been repaying advancements to the Insurance Compensation Fund made pursuant to the 1964 Act.